March 6, 2010

 

CBOT Corn Review on Friday: Down; rally fizzles amid chart resistance

 

 

Chicago Board of Trade corn futures ended lower Friday, near the low for the day and the week, amid technical pressure after an early rally evaporated.

 

March corn ended down 7 1/4 cents at US$3.64 3/4 a bushel and lost 13 1/4 cents on the week. May corn ended down 7 1/2 cents at US$3.75 1/2.

 

Prices were briefly higher at the open but soon retreated on a lack of follow-through buying, a trend also seen in wheat and soy. Traders say the corn market lacks a catalyst to propel it past major moving averages and into a technical chart gap dating back to January.

 

"We're stalled in a narrow, choppy trading range," said Doane Advisory Services analyst Marty Foreman.

 

Fundamentally the market has underlying support but not a strong reason to push higher, analysts say. A trader said that supplies in South America and the U.S. are ample.

 

"You've got big crops down there and big crops up here," he said.

 

Traders are awaiting Wednesday's supply-and-demand report and updated 2009 crop estimates, and could be cautious until then. Uncertainty about whether the U.S. Department of Agriculture could cut the size of the crop could limit the downside, analysts said.

 

A Dow Jones Newswires survey found analysts are on average expecting the USDA to peg the crop at 13.081 billion bushels, down from a January estimate of 13.151 billion. But analysts say such a reduction wouldn't be enough to move the market higher, and some add that lower production will be balanced by a lower demand projection.

 

Analysts on average expect the 2009-10 ending stocks to be virtually unchanged from the February estimate.

 

Demand is seen as unremarkable, and analysts are noting that ethanol margins have been eroding recently.

 

Concerns about early planting delays are underpinning the market, as traders begin monitoring weather forecasts. But weather over the next few days is conducive to slow melting of the Midwest snowpack, which would be generally seen as good for farmers and bearish for the market.

 

CBOT oats settled unchanged. March oats closed at US$2.19 a bushel and May oats settled at US$2.26 1/2.

 

Ethanol futures ended higher, rebounding after recent losses. April ethanol closed up US$0.011 at US$1.615 a gallon and May ethanol settled up US$0.007 at US$1.629.